IIRC actually, D2 modification can be extreme. Infact I'd be surprised if you couldn't modify the look of a character now that i think about it -- but my knowledge of D2 wanes when it comes to Mods, I never really picked it up, even after Blizzard made it easier.

Infested', I believe so but from my scarceD2-LoD knowledge that would resort to *.mpq tweaking to replace some sound and eventually graphic files. In either case, just keep a copy of those *.mpq archive files close by before even starting to tweak around with'em. That mainly if you are aiming to play it on line afterwards. Or in case you screw up that modding of yours and want to play the game again without having to reinstall it.

Edit add: At any case, here's a link to one of the best modifications for D2-LoD that I've known so far.